Question

Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is an $8,000 debit. (c) Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account. (d) The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.

Answer 1

Answer:

• Prepare the journal entry to write off the uncollectible account.

Dr Bad Debt Expense $ 13,000

Cr Allowance for Uncollectible Accounts $ 13,000

• Prepare the journal entry(ies) necessary to restore the account and record the cash collection.

Dr Accounts receivable $ 5,000

Cr Allowance for Uncollectible Accounts $ 5,000

Dr Cash $ 5,000

Cr Accounts receivable $ 5,000

Explanation:

• (a). Assume the current balance in Allowance for Doubtful Accounts is an $8,000 debit.  

• (c) Of the above accounts, $5,000 is determined to be specifically uncollectible.  

Dr Bad Debt Expense $ 13,000

Cr Allowance for Uncollectible Accounts $ 13,000

Because the company already has a DEBIT balance ($8,000) in the Allowance for Doubtful Accounts it's necessary to register an entry that COMPENSATE ($13,000) the existing value and reflect the value estimated as bad debts ($5,000).

• (d) The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in  

Dr Accounts receivable $ 5,000

Cr Allowance for Uncollectible Accounts $ 5,000

• (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.  

Dr Cash $ 5,000

Cr Accounts receivable $ 5,000